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When The Herd Turns
"In economics, [the mainstream] rely on experts who don't know what they are talking about," explains Professor Steve Keen in this brief but compelling documentary discussing 'when the herd turns'. "Herd behavior is a fundamental aspect of capitalism," Keen chides, but it is left our of conventional economic theory "because they don't believe it;" instead having faith that investors are all "rational individuals" (e.g. willing to pay 112x for OpenTable), which he notes, means "[economists] can't foresee any crisis in the future." The reality is - "we do have herd behavior" and people will follow the herd off a cliff unless they are aware its going to happen. "Contrary to herd wisdom, financial crisis are not unpredictable black swans..."
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You must CONSUME. Buy an iPhone or a GM car or something. The price doesn't matter because credit is cheap, bitchez.
Steve Keen is one of the very few Australians that we can be proud of. Most other financial commentators here are either coopted or moronic. Or both.
Check out my newly updated blog on Australian and international securities fraud.
http://drbenway.blogspot.com/ncr
The criminals are now using "charity" as an excuse to gain control over funds. Despicable.
When when when when when when
"Herd behavior is a fundamental aspect of capitalism,"
Horseshit. Herd behavior among humans is brought about by that monopoly on violence, known as Gubmint. Gubmint reduces choice, destroys currency, and un-educates the tax livestock. Herd behavior is simply a response to the placement of the cheese in the maze.
Or gun fire.
Collapse this year, BEFORE the elections.
Can't be stopped...
I felt the same way, four years ago, and still here we are. Timing is a bitch.
Collapse this year, BEFORE the elections.
Can't be stopped...
And the most efficient institution for stupefying the population while instilling dependence, "patriotism" and herd mentality is, you guessed it: government schools.
slow-motion flags for tha muthufuckin patriotic win!
Not all of bipedal bovinity is stupid. The cattle with 20/10 vision see the cliff ahead. These can only low so loud and for so long in an effort to stampede the herd against their would-be slaughterers. Those little dogies who perish on the rocks can't say that they weren't warned.
Moooooooooo.
Great movie about this:
http://www.imdb.com/title/tt0343259/
the purpose of putting the funds in a charity was to prevent foreclosure.
they probably owe the bank a fortune.
Thanks for the tip, I'll check it out. Personally, I find the movie that best describes Australian society is this one:
http://www.imdb.com/title/tt0387808/
She'll be right, mate.
A: Run with the herd, but wear a parachute or life-preserver.
p.s. You can't leave the stampede if your ass(et) is in the middle or front of the pack.
pps. How many times have some of us told you to DIVERSIFY into Primary, Secondary and Tertiary assets? Assuming you've got DI (Disposable Income) for investment, rather than living hand-to-mouth.
Steve Keen is one of the very few PEOPLE of whom we can be proud.
DavidC
Buy then all on credit, the discount is bigger!
Buy physical gold on credit!!
+1320.
Paul Krugman, Stephen Moore and Catherine Mann, not economists?
Oh, wow, the American Zombie Bot will have difficulty understanding this?
(And yes, Paulie K., the uber bank lobbyist, banks do create credit!)
Don't pay attention to the involuntary credit financed warfare-welfare machine and the Austrian therory of the busines cycle. Nope. It's the herd.
Yeah - as if Minsky was the pioneer of understanding credit cycles.
It always fascinates me how Keen completely ignores Austrian economics... obviously knows it the kiss of death for mainstream acceptance.
if you don't follow the herd you miss out on that sweet sweet momo action
you can be the herd or the shepherd or the wolf following the herd for dinner.
Spain. Bah! It'll never happen here in the US. Etc, etc.
"Herd behavior is a fundamental aspect of capitalism,"
Not even remotely. Capitalism is simply a win win trading of goods between two people by voluntary means.
Herd behavior is a fundamental aspect of how individuals in a group can act together without planned direction.
sounds like some excellent sarcasm to me actually.
http://en.wikipedia.org/wiki/Bandwagon_effect
"this is why the media capital of the world is New York City." the whole purpose is to get you to buy something you'd never in your right mind purchase...and certainly not at that price either. "in this case in 2008 it was the Federal Government doing the buying." Classic scam. "Those Jews were breaking down barriers all right." Race, color, creed...all our friggin money.
http://en.wikipedia.org/wiki/Chinese_wall
Put the US taxpayer on the hook for TRILLIONS.
that would be the SECURITIES people...not the bank which the taxpayer had to bailout out.
Even today no one questions this as a "bad deal."
Or should I say "no one questions this as a bad deal" as it is still ongoing (inflation/recession/robbing Iraqi banks of all their American money then "suddenly coming up with 500 million".)
https://www.youtube.com/watch?v=qAeCmbDQyMg
oooops. looks like no lessons learned. "interest rates are even lower and we just traded Detroit for Kabul." Baghdad for Manhattan is next? 58 billion for one year in Afghanistan?
"Far out...dude. Nice recession to go with that too."
It's not always win-win. Both parties presumably think they're benefitting at the time the deal is made, but that doesn't mean they will benefit. That's the kind of simplistic thinking Keen is challenging here... sometimes people freely choose bad decisions.
Capitalism is simply a win win trading of goods between two people by voluntary means.
This is nonsense. What you're describing does not exist; there are a few devils in the details here.
First, every situation is not set up to be a win-win. That might be possible in an ever-expanding world of unlimited resources, but we don't live there. Rather, a very large portion of transactions are zero sum games, at best (things get even trickier in a shrinking pie scenario).
Second, the parties to a transaction are rarely of equal bargaining position, which chips away at the "voluntary" notion of transactions. Ask yourself why capital tends to beat labor over the millenia of record.
Third, rational actors do their best never to be on equal footing when making a transaction. This is why we have barriers to entry, regulatory capture (and to a certain extent, regulatory creation), etc. In other words, rational actors are risk averse to losses and, thus, seek to ensure transactions are not voluntary for the other side.
Et al...
In short, if that is your definition of capitalism, then it is so contrary to human nature as to never occur, but for a fleeting moment (and even then most likely in a very homogenous culture). [I'll also posit that if that's your definition, then you need not call it capitalism, you could just call it "trade," circular use of the term aside].
Just common sense, but you have to hear it frequently to combat all the crap you hear from talking heads on MSM constantly telling you how wonderful the recovery is going.
tulipomania bitchez
Haha.
Tulip Bulbs here! Better than a gold guilder! Buy 'em now! See Ludwig at the dock!
SHORT TERM THINKING is also an important factor.
As is MANIPULATION.
Think about it. When pretty much everyone recognizes the markets are massively maniplated, how do you imagine people tend to behave?
Do you imagine they focus on fundamental analysis?
NO. Because everyone knows the whole point of manipulation is... to counteract those natural forces that any fundamental analysis would measure and predict from.
And so, what are "investors" (and today, also "savers") left with?
SHORT TERM THINKING.
FOLLOW THE MANIPULATION TREND.
... RIGHT OVER THE NEXT CLIFF.
Yeah you're absolutely right.
As with any scam, there are two distinct categories of victims. There are genuine suckers who simply do not realize the scam is a scam. And then there are cocky suckers, who realize it's a scam but think they can still benefit from the scam.
It is a lot easier to sympathize with the first group.
Hi Doc, did you see ASIC come against the establishment of the Royal Commission?
It shows who they work for. It's a disgrace.
Hi Prisoner, yeah I saw that and it made my blood boil. Medcraft is a treasonous slime, desperately trying to cover his own sorry ass and that of his accomplices.
The problem is that the entire system is now so corrupt, I just don't think any truly meaningful reform is even possible anymore. Commission or no commission, doesn't matter.
Depressing but what can I say? The criminal entities that control ASIC also control the courts, the media, the financial system, the major corporations, you name it..
There are an infinite number of variables that input into human behavior; however, with enough prepararation, anticipation and long term critical thinking one can change the probabilities more in one's favor. There are things out of our control but having said that most life decisions are under our control. We can blame others (fill in others with bankers, mom, whichever tribe you want) but the horrible truth is we in large part have the last say. It all goes back to probabilities and changing them more in your favor, whether it is not smoking or turning down some good looking piesce of ass that has the gift(s) that keep on giving, saving for the future (yes and that can mean PM, bitcoin or whatever)or spending like an drunken consumer. Just don't whine about it when your decisions revisit you in the future...and they will if one is lucky (there's those damned probabilities again) enough to have a future.
isn't communism herd behavior too? haha, got is ass...
pssst, all human action taken in group is herd behaviour.
don't tell this to anyone, but herd behaviour is fundamental to human society.
Folks are aware where that opening clip came from, right? That sounded like Allen Funt.
If you want to understand human nature go to college, study anthropology, psychology, sociology, philosophy, political Science and so forth and such as.
Or spend an afternoon youtubing Candid Camera episodes.
The study of economics is often baffling and confusing. Many economic theories exist but many are full of holes and conundrums. Much of how people react to a policy may have to do with timing and perception instead of reality. Economics is full of loops that feed back upon themselves and unexpected pitfalls based on expectations.
All this can become quite abstract. Economist predict events that never tend to unfold as expected or planned. Many of the "modern monetary theories" in use today have not been proven over time, but reflect an attitude that we can control economic cycles better than in the past. This leaves us in a very dangerous spot. More on how few people really understand this very important part of our lives in the article below.
http://brucewilds.blogspot.com/2014/03/few-people-really-understand-econ...
Economics refuses to acknowledge that it has been consumed by, and is merely a subset of, the field of psychology. The problem of course is that economic theory is rooted upon matters that psychology has already declared wrong. This is why economic models fail to predict human behavior. I'll go so far as to say that if you have to boil it down to a single issue, it is the refusal of economics to accept the extent to which rational actors will go to avoid the normalization of profit. Alternatively, you might say it is the result of economics focusing solely on the quantifiable aspects of life, which do not comprise the entirety of the bases for our behavior (thus the "rational actor" isn't rational according to economic theory).
Keen will be seen as someone from the loony bin land that is Australia as a man who called bullshit when he saw it......
Moron aussie speculators will be fleeced......the land of OZ.......where the dumb people look smart.
W T F am I doing up at 3:45 reading ZH? I'm losing my mind folks. Every day I get up and it's the same old shit every day. Banksters and crooked politicians and their elitist pals scoring another victory over all of the idiots like myself that think there is a day of reckoning coming. Let's face it folks, by not joining the party, what I've done is sit here waiting for this house of cards to come down and it is now patently obvious that I am the fool. I should have been buying stocks with every spare dime I had.....or better yet, probably should have gone to my local bank, borrowed every nickel I could against all of my paid for property and invested it in the big casino as well. My guess is that IF, and that is a huge leap, IF this thing does implode, not only did I miss the biggest money making period in history, but everything I do have will be confiscated by the government anyway...or I'll be overrun and killed by marauders when TSHTF. I doubt seriously if my stash of .223 and 9mm will be of any use against my unfortified dwelling. Yep, I've finally come to the conclusion that I am the complete idiot and reading ZH every morning is doing little to give me hope that any of the fucktard politicians and financial criminals will ever see justice on this earth. That my friend is depressing. Then, to top it all off, come Judgement Day, I'll probably find out that Lord Blankfein WAS doing God's work all along and I'll end up in the Lake of Fire with all the other Zero Hedgers.
Have a nice day everyone. Another Record Day on Wall Street is a certainty. Meanwhile, I'll be out cutting wheat and selling it for less than the cost of production because the same assholes who have worthless shit toilet paper valued at all time highs have driven the prices of grain the way of Gold. Who would have thought it. Food and Gold = Shit. Phoney Paper is worth a fortune. Lovely. And to top it all off, I've also come to the realization that I'll never have one of those super model Russian women that keep popping up in my sidbar ads either. Sucks to be me.
Hope it isn't too late to join the herd.
Yeah I'm considering joining the herd too, reading ZH all day everyday is getting depressing.
Don't do it, RaiZH. I took the Blue Pill yesterday just as an experiment and 24 hours later I am still craving Apple products and network TV police show dramas. How the heck do I come down off this stuff? And what time does the Today Show start...I need to hear some sheeple news.
Never too late to join the herd, just cover your tracks as you will never be a sheeple.
Damn dude.. I thought it, you wrote it. Ignorance is bliss. You are not alone.
Thanks db51...minus the superlatives, you've described exactly how I feel. I pulled out of the casino over 2 years ago, bought gold, lost it all in a boating accident and have watched day after day the casino winnings rocket through roof. Like you, I stand amazed that hard work and sound money have been replaced by grift and fiat paper. I just don't get it. Anyway, thanks for your honesty.
lol +1
db51: Hello, my pretend name is PT and I am a ZH addict and so are you. (Actually, I haven't been too bad this week, but that doesn't guarantee anything...)
I think the cure has something to do with turning the computer off and wandering outside and going somewhere quiet. Damn shame, I used to do fun things with computers.
db51, I am right there with bud. I even have the same hot Russian / Chinese / latina women on my sidebar ads !
Maverick
db and all, this is how the herd mentality works - and why it's so compelling. Nobody wants to lose out and get left behind when all those other investors are winning.
Question for y'all: why the name Zero Hedge?
Crushing Consumer debt and a debauched ignorant dependant publik skool educated populous that could fit right in at Sodom and Ghomorra is how they keep the system going. Have you seen the new cast of Big Brother? This is us. Yeah. We're all probably fucked however never count Karma out. We live as we choose. So stay out of debt, turn on, tune out, keep stacking, and it might just pay off in the end.
db51: +10000 for you. This is for your tormentors:
"Ezekiel 25:17. The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men. Blessed is he who, in the name of charity and good will, shepherds the weak through the valley of the darkness, for he is truly his brother's keeper and the finder of lost children."
BANG!!!
-Jules Winnfield
That first sheeple going off the cliff? Kardashian fan. The second? Your co-worker who opined "the federal reserve bank is vital to our existence. Think of what will happen if we dont have them around!"
What the world needs is a good 5 cent cigar.
Well, you can still buy a cup of coffee for a dime...iff it's the "right kind" of dime. just sayin' ';-D
This film doesn't say anything different than what everyone on ZH already knows. Many, many, many in the blogosphere were sounding the alarm from 2006 to 2008. The key is timing. Being early or late is the same as being wrong, IMHO.
How come he (the subject of the film) didn't say when the next crisis would occur? We all know they will occur - we just don't know when. this is what keeps us from going long - we know there's a cliff ahead. No knowing exactly when it will be upon us gives us cold feet (rightly so).
If it's a collapsing currency, I'll take too early every time. Same for collapsing real estate. I sold all my rental houses by 2004. I seriously considered selling my own house, too. Wish I had! Return of capital is more important than return on capital when bubbles pop. I haven't sweated a day over not being in stocks. It's blatantly obvious that the Baby Boomers retirement(pulling out funds) is seriously deflationary in the near future. The only way to prop this fraud up is with FED counterfeiting. I'll start worrying about stocks when the MSM is reporting on Baby Boomers losing everything in their retirement accounts and having to live within their means. That means the reset has taken place.
Here is a serious question: Does it really matter what the herd does? Can't the people at the helm just keep doing what they are doing? Even if the hered starts to turn, why cant the manipulators just turn the algos loose on whatever part of the economy and goose it higher of lower? After all it doesnt matter anymore how many trillions of dollars it takes, they are just 1 and 0 in a program after all. And that whole stick about QE is just bullshit anyway. 80 billion, 40 billion, whatever. They do whatever they want, by how much they want, whenever they see fit!
My guess is they will create the next crisis themselves, be it in stocks or bonds or both, and wind up sitting pretty while the herd begs for more guidance and help from their masters.
To JS Bach: Where is the Parish on the Rocks located?
Where is this "capitalism" he speaks of practiced?
In Idealcapitalism Land on the Rainbowunicornfairy World. Not far from Workingcommunismland and the Benevolentalllovinginfinitelywiseallknowing Kingdom.
Where is this "capitalism" he speaks of practiced?
Here you go...Humane Animal Slaughter. Three basic principles:
1) Non-slip flooring (keeps 'em moving and reduces panic)
2) Adjusting or adding lighting (so they think they see where they're going) while...
3) Blocking vision as to what's really ahead
http://www.youtube.com/watch?v=RoNErsJNPzw
Edit: The shoots are designed such that the herd can not turn around.
Don't forget the Judas Goat (i.e., the deviously clever politician)
Hoax and chains, anyone?
Like lemmings to the sea...